Latest news with #finfluencers
CNA
2 days ago
- Business
- CNA
Commentary: Don't be fooled by GenAI financial advisers
NEW YORK: The wealth management industry is prepared to court its newest potential clients: Gen Z. Instead of trotting out older professionals with decades of experience, companies are utilising generative AI to develop digital assistants. These new 'experts' even come with the ability to use slang to appear relatable and relevant to their target demographic. Embracing the newest technology is yet another cultural shift in the financial services landscape that disrupts some of the norms in the industry. We've seen it with the development of robo-advisers and the rise of ' finfluencers '. Cue the traditionalists turning their noses up at how far the financial advice field has strayed from its origins. After all, future iterations of GenAI really could accelerate the long-prophesied doomsday for flesh-and-blood financial planners. IMPROVING SOFT SKILLS But now isn't the time for humans to declare defeat. Until advanced versions of the technology arrive, people should be doubling down on the one significant advantage they have against their digital counterparts: soft skills. Providing investing advice is only one facet of the job. The role is part therapist, accountability coach and teacher. Real people can push back against panicked requests to sell in a turbulent market instead of simply executing an order. A person understands how and when to ask more questions to determine the reason behind a request for conservative investments such as bonds, even at a young age when it's detrimental to be overly cautious. The problem for many young adults is that accessing this more holistic approach, which goes beyond stats and data, is costly. Financial advisers usually get paid in one of two ways: assets under management (AUM) – a percentage of a customer's investments each year – or a flat-rate fee. The latter varies based on the level of service. A comprehensive financial plan can cost thousands of dollars. AUM ranges from 0.25 per cent to 1.5 per cent, with some advisers reducing the cost as the size of a portfolio grows. LOWER BARRIERS TO ENTRY The greater barrier to entry is the possible minimum investable assets requirement, which often hovers between US$500,000 and US$1 million. Fifteen years ago, these factors prohibited access for millennials. This reality paved the way for cost-effective alternatives in the form of robo-advisers, such as Betterment and Wealthfront, with significantly lower AUM and no asset minimums. The companies sent shockwaves through the industry as many wondered if machines would finally usurp man. As years passed, it became obvious the two could have a symbiotic relationship. In fact, it turned out millennials ultimately did crave some soft skills, which led to platforms launching versions that gave customers access to humans. Instead of cratering the industry, the robo-advisers forced their living counterparts to compete in different ways. Some diversified their services, including offering virtual counsel, and others targeted less-affluent clientele. While it's easy for the regular consumer to conflate a robo-adviser with GenAI, the two are not the same. The latter is built on language-learning models instead of the mathematical-centric AI models and machine-learning algorithms that provide the underpinnings for companies like Betterment and Wealthfront. Gen Z investors may be more attracted to GenAI because it can simulate how people speak and even look. Plus, the cohort is more primed to be early adopters of the tool. They've grown used to receiving free, one-size-fits-all money guidance online. FALLIBLE TECHNOLOGY A stunning 77 per cent of teens and 20-somethings use online platforms and social media to answer their money questions, according to a 2025 Credit Karma survey. But they should remember that the technology's modern iteration is new and, like humans, fallible, which results in inaccurate or misleading information known as 'hallucinations.' Even with all these issues to resolve, companies are bullish on GenAI's ability to spit out 24/7 guidance and woo new clients. Arta Finance, a wealth management startup, is at the forefront of providing an AI financial adviser with Arta AI. The 'AI agents', as the company refers to its investment planner, product specialist, and research analyst offerings, can respond to queries by voice or text (and do so in the aforementioned generationally-appropriate slang). Arta is only available to accredited investors and offers access to human professionals, but the company plans to make Arta AI available to other financial services companies. A move that could give all kinds of retail investors access to its product. It's likely that plenty of platforms won't wait to license the service and instead will develop their own. A HUGE PITFALL Robinhood Markets plans to launch Robinhood Cortex, an AI-powered digital research assistant, this fall. The app offers a variety of investing options, including Robinhood Strategies, the company's robo-adviser. Unlike Arta Finance's offering of real-life advisers alongside its AI agents, Robinhood customers can currently only access a support team, which is mostly available to handle administrative questions. And that's a huge pitfall. Companies that don't prioritise establishing relationships with real professionals can cause retail investors to panic in turbulent times, especially novice ones who are able to access advanced opportunities, such as trading options. Granting inexperienced customers access to higher-level investing products without proper support can be financially, mentally and emotionally ruinous. Robinhood should know. In 2020, it paid the largest Financial Industry Regulatory Authority fine in history – US$70 million – for its technical outages, lack of due diligence before approving customers to trade options and sending of misleading information.
Daily Mail
4 days ago
- Business
- Daily Mail
Three quarters of Gen Z investors now rely on social media and finfluencers for tips
Nearly three quarters of Generation Z investors head to social media and 'finfluencers' as their main sources of information when making investment decisions, data shows. Gen Z's reliance on these sources is considerably higher than among other generations, with 60 per cent of millennials similarly using social media, according to research from Charles Schwab. Only 36 per cent of Gen X use social media as their main source of information, falling to just 11 per cent among baby boomers and the silent generation. Some seven in 10 Generation Z - adults between 18-28 - consider themselves active investors. The figures indicate young investors are more likely to turn to finfluencers than the generation as a whole, with recent data from Santander indicating 31 per cent of Gen Z look to social media personalities as their main source of financial information. Richard Flynn, managing director at Charles Schwab UK, said: 'Digital platforms and the sheer volume of financial information available today has made it much easier for young investors to trade. 'This is allowing the creation of online investment communities and forums, with finfluencers and social media playing a much more important role in the investment process than in previous years.' Finfluencers have their critics, as unlike traditional sources of financial information, such as financial advisers, they aren't regulated, and there are concerns that some may be sharing misinformation online, knowingly or not. While considerably more popular among younger investors, the overall use of social media and finfluencers as sources of financial information increased to 43 per cent of investors as of 2025, from 39 per cent a year ago. Networking platform Linkedin proves the most popular social media for investing tips, with 46 per cent of younger investors turning to the social media, compared with 44 per cent using Instagram, 43 per cent using TikTok and 40 per cent choosing Reddit. Alongside social media personalities, younger investors are also increasingly relying on conversations with other retail investors on online forums and communities when looking to make investment decisions. More than half of Gen Z investors also read online blogs when deciding where to invest. As with use of finfluencers and social media, this is a trend that is only increasing. The use of online communities has rise to 45 per cent for among investors as a whole, compared to 39 per cent a year ago. Despite this growing trend, many younger investors are still aware of the benefits of professional advice. Some 67 per cent of Gen Z said the most important source of information for making investment decisions was financial advisers and fund managers, a higher proportion than the 63 per cent average. Flynn said: 'The increase in the number of sources that provide investment information means it is becoming increasingly important that young investors know what they can and can't trust. 'It is therefore reassuring that our research shows Gen Z still recognise the benefits of proactively seeking professional advice to make the most of their investments. 'If new investors are looking to adapt their strategies with the current market volatility to aim to protect against losses, a diversified portfolio, balanced across asset classes and sectors is a sensible, time-tested approach for many investors.'
Bloomberg
6 days ago
- Business
- Bloomberg
Gen Z, Don't Be Fooled By GenAI Financial Advisers
The wealth management industry is prepared to court its newest potential clients: Gen Z. Instead of trotting out older professionals with decades of experience, companies are utilizing generative AI to develop digital assistants. These new 'experts' even come with the ability to use slang to appear relatable and relevant to their target demographic. Embracing the newest technology is yet another cultural shift in the financial services landscape that disrupts some of the norms in the industry. We've seen it with the development of robo-advisers and the rise of 'finfluencers.'
CNA
17-05-2025
- Business
- CNA
Why regulating ‘finfluencer' content isn't going to save us from making bad money moves
For most of us, trying to figure out how to best manage our money can be overwhelming. Just like how most of us learnt how to spend and save our primary school allowance from our parents, we seek out people who have already done it before us as a guide. We watch videos, browse forums and devour blogs, hoping to learn from others' experiences (and, hopefully, avoid their mistakes). It's no wonder that 'finfluencers' – online creators specialising in content about financial literacy and breaking down complex financial concepts for the layman to understand – have become so popular in recent years. In an October 2024 survey by MoneySmart, over half of Singaporeans aged 18 and above said they relied on platforms like YouTube, Instagram, Facebook, and TikTok for financial advice, preferring them over traditional sources such as family, friends, and financial advisers. The internet has made financial advice more accessible than ever. We cannot ignore the benefits of such resources, especially if we were never taught these things in school or at home. But just as we're encouraged to consult doctors rather than relying solely on health advice found on the internet, no one should be relying on financial advice online for their own financial decisions. THE CHOCOLATE FINANCE WAKE-UP CALL In March, Chocolate Finance customers experienced a temporary liquidity delay following mass withdrawals caused by online panic. The financial services company had marketed themselves as a more attractive high-yield alternative to put one's cash in, boasting returns as high as 3-5 per cent per annum through a managed investment portfolio. It gained popularity quickly, receiving favourable reviews on social media platforms and Internet forums. However, when a few YouTube videos about several prominent finfluencers withdrawing their Chocolate Finance funds went viral, it led customers to worry if the platform was truly safe, resulting in massive withdrawals within a day or so. The company could no longer afford to continue supporting instant withdrawals, leading to further panic when many users found themselves told to wait a few days before their funds would land in their bank accounts. None of the public's initial fears about the platform materialised – all customers who requested withdrawals during the height of the meltdown, between Mar 10 and Mar 18, got their money back within a week or two. However, the incident raised questions about how online sentiment could so quickly lead to a liquidity crunch in a regulated financial firm. The Chocolate Finance saga highlighted a broader issue with personal finance today: That so many of us seem to have a tendency to make snap investment decisions based on little more than a short video or blog post. NO SUCH THING AS ONE-SIZE-FITS-ALL FINANCIAL ADVICE A fresh graduate saving for a wedding should not follow the same investment strategy as someone nearing retirement. A dual-income household with no kids will have different insurance needs from a single parent. What works for one person might be unsuitable – or even harmful – for another. Yet, much of the financial content online presents examples, scenarios, or success stories without always highlighting these distinctions. To be fair, we cannot realistically expect all content to do so sufficiently. Such advice, designed and packaged for online consumption, must be broad so as to appeal to the largest possible group of viewers or readers. This doesn't invalidate such content, but it does call for critical thinking from us as consumers. Short videos and posts can only convey so much, and even the most well-meaning advice may not apply to everyone's situation. 'Save 30 per cent of your salary' seems like sound advice, but for someone already struggling to make ends meet, this is hardly feasible. This is not a flaw of online financial advice, but rather a reminder that all advice, whether found online or offline, must be interpreted through the lens of individual context. Just because someone posts a video on TikTok talking about how they grew their portfolio by investing in crypto doesn't mean you should blindly follow suit. REGULATIONS ALONE CANNOT SAVE US In response to the Chocolate Finance fallout, many have called for tighter regulations on finfluencers and financial content online. There's good intent behind this. Financial advice should always be responsibly given, and content creators who promote products should be transparent – especially if there's a commercial relationship involved. But regulation alone isn't the fix. Even before the advent of social media, licensed professionals have been known to cross ethical lines or mislead their clients. A Great Eastern insurance agent was jailed last year after misappropriating over S$300,000 from his clients by forging insurance documents and redirecting funds. In 2018 and 2019, two former personal bankers with UOB separately received jail sentences for cheating their clients of hundreds of thousands of dollars. Their victims weren't deceived by TikTok videos and Instagram carousels – they were misled by credentialed individuals wearing suits, working in bank branches and corporate offices. Official qualifications and titles do not guarantee integrity either. Misalignment of incentives, pressure to meet sales targets, or personal misconduct can lead to poor advice – even in regulated environments. The fact is that bad financial advice doesn't just live online. It can come from anywhere, even your well-meaning aunt at family gatherings. The more empowering and sustainable approach is to understand that the only person who will always have your best financial interests at heart is yourself. TAKING RESPONSIBILITY FOR OUR DECISIONS Taking ownership of your finances means more than just watching YouTube videos or reading a few blog posts. We can't always blame someone else for our decisions, even if they had influenced our thinking. Six years ago, I bought a resale Housing and Development Board (HDB) flat because I was worried about stretching my finances too thin, despite my property agent advising that the resale condominium across the street was a much better deal. Six years on, I'm watching the owners of the condo unit across the street walk away with a S$400,000 gain, while my HDB flat has barely appreciated in value. Despite my regrets, I'm in no position to blame my agent. Ultimately, I made the call for myself. It can be a hard pill to swallow, but what we choose to do with our money is up to us – not that influencer with the slick Instagram feed, or the financial adviser pushing you to buy a policy by month's end, and definitely not the strangers in Telegram groups hyping up the next 'sure win' investment. So the next time you see a viral TikTok about a "sure-win" investment, remember this: Not all financial advice is bad, but not all financial advice is meant for you. Don't just ask yourself 'Is this good?' Ask yourself: 'Is this good for me?' We must stay curious, choose wisely and never outsource our personal financial responsibility to anyone else.
News.com.au
13-05-2025
- Business
- News.com.au
Facing prosecution: Aussies warned against taking ‘Finfluncer advice'
Taxpayers are being warned just because someone has a large following, it doesn't make them a tax expert, with TikTok 'Finfluencers' and AI being called out ahead of the end of financial year. With tax season approaching, the accounting industry body warns of the pitfalls of getting free advice from social media platforms, noting Aussies face big fines and prosecution if they falsify their tax return. Chartered Accountants Australia and New Zealand tax lead Jenny Wong, said it's concerning many Aussies will watch this content and assume they are getting free expert advice. 'In many cases the advice from these accounts is simply wrong. In other cases, the claims have an ounce of truth but would apply only to a very small group of workers,' she said. According to Ms Wong, getting bad tax advice could result in missing out on legitimate entitlements or worst still, big fines and even prosecution. CPA Australia took aim at some of the TikTok users' advice, including claiming a pet as a 'guard dog' while working from home. Another claimed they can deduct the cost of a luxury handbag by telling the ATO it is used as a work bag, while a third told Australians they can claim thousands in fuel rebates without a receipt. 'Exaggerating a claim can have consequences. Making false tax claims could result in hefty fines, a criminal record or even imprisonment. Arguing that you took advice from a finance influencer on TikTok won't cut it – your tax is your responsibility,' she said. Ms Wong also warned ChatGPT and other OpenAI tools which should also be treated with caution. 'Nothing can beat the sound advice of a professional tax agent,' she said. 'AI tools are only as good as the information you put into them. It may be tempting to ask AI bots for tips, but they are simply not able to compute the nuances of the Australian tax system or your specific circumstances.' Instead of relying on tax tips online Ms Wong offers:
